Reversing an interpretation of the Gun Control Act that has been on the books for more than four decades, ATF today posted a rulingdeclaring any shipment of a firearm by a manufacturer (FFL) to any agent or business (e.g., an engineering-design firm, patent lawyer, testing lab, gun writer, etc.) for a bona fide business purpose to be a “transfer” under the Gun Control Act of 1968. As a consequence, legitimate business-related shipments will now require the recipient to complete a Form 4473 and undergo a Brady criminal background check. In many instances, these requirements will force shipments to a third party, thereby lengthening the process and the time that the firearm is in transit.

But of course this is to prevent criminals from exploiting the dreaded engineering design firm loophope. Well, except that, “ATF is unable to identify a single instance during the past 40 years where a single firearm shipped in reliance upon ATF’s rulings was used in a crime.” Well, that may be, but surely terrorists are going to become patent attorneys so they can steal the guns they are sent to evaluate, and use them to shoot down jetliners. It’s only a matter of time.

As you may be aware, people who work for a business are either employees or independent contractors. Employers with employees must basically become tax collectors, subtracting out income tax withholding, FICA taxes, unemployment insurance, etc. Businesses that utilize independent contractors do none of this, and the contractor must report and pay their own taxes. There are many legal and illegal ways for independent contractors to reduce their tax bill; not so many for employees. For example, I managed to reduce my spouse’s 2009 taxable self-employment income to a few hundred bucks using purely legal and non-questionable means, but if she had been on the payroll as an employee she would have paid ten times as much or more tax.

Obviously, independent contractors are more prone to, shall we say, “misunderstandings” (that is a much nicer word than legal tax avoidance or illegal tax evasion). This is why Schedule Cs are audited at ~4x the rate that corporations are.

This new ATF ruling strongly encourages businesses to establish employer-employee relationships, not independent contractor relationships. I would not be surprised to see other government entities in a wide variety of fields taking similar measures to discourage the use of independent contractors. Everyone knows that there is a gaping hole in the budget; increasing tax rates is politically costly but using non-elected regulatory agencies to promote paying taxes at higher rates is expedient and has less accountability.

Of course, maybe I am assuming far too much coordination than is possible out of the federal government. But as incompetent as the .gov can be, they do take tax collection pretty seriously.